WTMC Aims to Upend Distribution & Financial Models

March 19, 2018

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WTMC's Sarosh Waghmar talks:

Putting clients first

New Distribution Capability

TMC financial models

WTMC CEO Sarosh Waghmar is breaking away from entrenched
corporate travel industry paradigms by building proprietary technology
and pursuing a New Distribution Capability strategy that he says will
disintermediate traditional distribution pathways and make established global distribution
systems just another shelf from which to select travel content. WTMC, formerly
called W Travel, has kept a low profile, yet the company has been name checked
as a partner of artificial intelligence innovator Mezi and by the International Air Transport Association as the first
travel management company to achieve Level 3 NDC certification. The agency has NDC
connections with American Airlines and is the first U.S.-based agency
testing NDC connections with British Airways. It has plans to do the same with
Delta, United and Lufthansa.

The connections themselves are "no big
deal," said Waghmar. It's the process after accessing the content that
requires the heavy lifting: building an entirely new technology
stack to deliver the content, maintain the traveler profile, provide the agent
dashboard, process and store the passenger name record and function as the
customer relationship management system. "We want to build the single point
of truth," he said. For the moment, it's a vision, but WTMC is
trailblazing. The company recently
hired Jennifer Steinke not only to run its own travel program but to act as an
internal advisor and test technology developments. Brandon Jonson is WTMC's
technology VP. The company has courted and won high-profile venture capital
clients and fast-growing tech companies like Spotify, which demand high-touch
service but also are willing to experiment. BTN editor-in-chief Elizabeth West spoke
with Waghmar about how he got started on this path and how the company plans
to move forward.

BTN: You were
introduced to business travel as a consultant for Deloitte, becoming a road warrior
yourself. How did that snowball into founding a TMC?

Waghmar: I came
to the United States in 1994 from Bombay on a computer science scholarship at
The University of Texas. My first job was at Deloitte. I consulted on and
implemented end-to-end data warehousing and e-commerce. It was very cutting
edge. As a consultant, you travel a lot, so you get exposed to frequent-flyer
points. I became obsessed with product, cabin classes and loyalty programs. We
had American Express [as the in-house agency] at Deloitte, but it got to the
point that Amex agents were calling me to figure out the best way to book
travelers. I would tell them, "Book it on United, book seat XX. It will
sell as economy, but it has the old business class seats." Or I would tell them
to book with a certain credit card to get double or triple points. I would just
share all these tips. I had this ability to connect the dots and see the
patterns with miles, airlines and routes.

BTN: You left
Deloitte after two years, and I understand you were scraping by for a while.

Waghmar: The tech
market crashed in 2002. Everything was put on hold and I was stranded. I had no
job, I was on my last savings. I wasn't going back to India. There were times I
slept in my car wondering what was going to happen next. I came across this
promotion: You could buy magazines and [get frequent-flyer points, then] transfer the points to Starwood. At that
time, you could still fly the Concord. BA had the biggest route, New York to
London, but it cost $18,000 to $20,000. I figured out that if I bought the
magazine, transferred to Starwood and then transferred to Qantas—Qantas was a
partner of BA—I could get a Concord ticket for $860. I put ads on eBay that I
could get a Concord ticket for $3,000. I would get [the travelers'] dates, set
up a Starwood account, set up a Qantas account. All of this was [legitimate]. I
was not selling miles; I was getting paid as a consultant. Qantas had to change
their program. I did a similar thing with a Kellogg's Special K cereal
promotion with American Airlines. In the end, I donated 12,000 pounds of
cereal; I got a tax write-off and I developed a lot of knowledge around where
people travel, why and what they spend.

BTN: You parlayed
this skill into travel agency work. How?

Waghmar: Around
2003, I learned how travel agencies got discounts for business class airfares. So
I learned Sabre. I had been interviewing with all these venture capital firms
at the time, but I stopped doing that and instead started calling them about
business class travel discounts. I came from a road warrior consulting
background, so I knew what these guys wanted: miles, nonstop flights, Wi-Fi on
board, seat pitch. Typically, TMCs just give a published fare and then keep the
discount as a commission. I wondered why I wouldn't give that back, and based
on that transparency, I grew from a one-person shop in 2003 to a 20-person shop
in 2012. I'm amazed when everyone says there is more money in hotel.

BTN: Your early
focus was service, but you've positioned WTMC as a technology company with a
strong NDC bias. Put the pieces together for me.

Waghmar: The more
I learned about the TMC business, the less it made sense to me [especially global
strategy]. TMCs pass business to regional partners because they don't have a
set up in certain regions; they have different GDS [agreements] and revenue and
segments. [Traditional TMCs operate as if it's] impossible to provide that service
globally without partners. But even with partners, it doesn't go well. Let's
say you need to change a London-to-Hong Kong flight. You originally booked from
the U.S. because that is where you are based, but you are in London, so you
call up the London American Express. They have to call up Amex in the U.S. to
find the reservation. The U.S. Amex is looking for a fare from London to Hong
Kong; they may or may not find the fare, or they may find different pricing.
The customer is logging on to Expedia in the U.K. and they see the fare right
there and ask why the company is saying it's not available. It's all the GDS
segments and all the back-end money they are getting. I want to build out the
entire platform to provide one global TMC that puts the client first and doesn’t
worry about GDS incentives.

BTN: How are WTMC
agents different?

Waghmar: Our
agents don't sit in front of one PC, they sit in front of 150 cities. I can
issue tickets on Japanese low-cost carriers, [for example,] sitting in one
place. If a traveler needs to fly Hong Kong-to-San Francisco, it's $12,000 on Cathay Pacific, but I can purchase in Hong Kong and buy it for $8,000 locally when
converting to dollars. That's a huge value. This is where my core competency
is. I choose to because I am not dependent on putting everything in the GDS. If
it's not available there, we find it elsewhere and push it to the client. I've never taken GDS incentives. Why not
challenge the status quo?

BTN: How does NDC
figure into this strategy?

Waghmar: The
first question about NDC that I asked Cory [Garner] at American: "You will
guarantee that I can pull out a fare from Sydney to Los Angeles while sitting
in New York. You will give me access to all of this so I can do any AA flight
anywhere in the world from one site, one connection." He said yes.
I asked him about upgrading flights for my [American Airlines] Concierge Key VIPs to go from
economy to business instead of sitting on a phone line. NDC gives me the
ability to control the entire customer experience.

BTN: What about the
personalization piece associated with NDC?

Waghmar: It
changes the dynamics of everything. Right now, you check the Delta box and you
see everything by price [in the booking tool]. With this platform and these
pipes, once I am connected to American through this, I can push out American
content and it will be sorted based on your status, which it dynamically
matched. The airline can push out what you asked for but also all the benefits
you get based on the status. Right now, if [the agent] knows someone is Global
Services [level], they can buy the cheapest ticket [and count on the upgrade]. NDC
enables that without the agent having to check everything separately.

BTN: What's
stopping you from turning that capability on tomorrow?

Waghmar: Connecting
through NDC is no big deal. How I am going to consume it and how I am going to
push it? This is the challenge. One is displaying content to you, but let's say
you buy one segment via NDC and one segment on the GDS. Where is it stored? In
Sabre? In North America, there are only two mid-office systems: [Cornerstone's]
IQXC and [Concur's] Compleat. WTMC has to build the mid-office technology to
consume NDC [and] GDS content. If I don't, I can go live with American Airlines
right now, start purchasing tickets and push those out to the client, but then
I still have to pay Sabre, and that makes Sabre more powerful.

BTN: What's the
road map?

Waghmar: We are
building out the core engine to drive various modules. Some modules will be
built simultaneously on bots that can be automated and beings, [meaning] humans.
Next, the NDC piece. The beauty will be in the personalization. I will have the
profile and I will automatically know the status, and we will display content
accordingly. Next, there will be the agent dashboard completely driven by us
and able to take in our content. We are looking at the Google API for flights, all
the Sabre stuff and all the consolidators. We have to connect all that and
giving the agents one dashboard to push all that out, [including] the rules
based on where the client is and their policy.

BTN: What about
hotel commissions? That's how most new entrants are making their money right
now.

Waghmar: How
about I put into the contract that we get no commission and we get a better
price for the client? We want to make it transparent upfront so there is no
other startup like WTMC that will come tomorrow and wipe us out. If we can do
NDC for airlines, I know we can do it for hotels.

BTN: Are you
going to deal in transaction fees?

Waghmar: We want
a subscription model. I look at all these contracts: offline, online, touch, no
touch. It is madness. Who has time for this? Just give one price and get on
with it. No one wants to get involved in all of that.

BTN: Subscription
fees had a moment a few years ago, but most everyone went back to transaction
fees. Why do you think it will be different for you?

Waghmar: I don't
have all the answers. I do know that our DNA is technology, and I am talking to
young clients changing the world. I can't push technology platforms with
multiple combinations of things that make no sense. We have to make sense for
the client. What will the subscription fee be? It won't be a dollar. Also, we
are very picky about clients we take onboard. We are going after startups and
companies that will be the next Uber. And we want to grow with them and be part
of their journey and scale up along the way.

BTN: So far, you
have not taken any venture capital or startup money. Will you need it to scale
up?

Waghmar: There have
been offers to buy us out and we have very big-name venture capital executives
on our board, but we have not taken money. We want to do everything at the
right time, but we are doing this the old-fashioned way. We will get money and
we will scale up, but it's not always about being fast or [about getting] one
more round of funding. Will we raise money? Probably at some point, but we have
been focusing on the customer and doing what is right for them.

________________

Correction: A previous version of this article identified Rudy Chou as WTMC's chief technology officer. BTN regrets the error.